Chapter 16 Consumer Behavior and Product Strategy McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

Exhibit 16.1 - The Wheel of Consumer Analysis Product Strategy Issues

Product Affect and Cognition Satisfaction/Dissatisfaction Consumer satisfaction is a critical concept in marketing thought and consumer research. The most current formulation of studying satisfaction is the expectancy disconfirmation with performance approach. Consumer satisfaction is the degree to which a product’s performance exceeds the consumers’ expectations for it.

Exhibit 16.2 - An Expectancy Disconfirmation Approach to Satisfaction

Product Affect and Cognition (cont.) Prepurchase expectations are consumer’s beliefs about anticipated performance of the product. Postpurchase perceptions are consumer’s thoughts about how well the product performed. Disconfirmation refers to the difference between prepurchase expectations and postpurchase perceptions. Positive Negative Dissatisfaction Neutral Balancing paradigm approach

Product Behavior Product contact Brand loyalty/variety seeking Consumers may come in contact with products and experience them in a variety of ways. Brand loyalty/variety seeking Brand loyalty is an intrinsic commitment to repeatedly purchase a particular brand.

Product Behavior (cont.) Variety seeking is a cognitive commitment to purchase different brands because of factors such as stimulation involved in trying different things, curiosity, novelty or overcoming boredom. Derived varied behavior does not involve intrinsically motivated behavior.

Exhibit 16.3 - Categories of Brand Commitment and Purchasing Patterns

Product Behavior (cont.) The degree to which consumers are brand loyal or seek variety can be viewed as a continuum. Marketers need to be concerned with the usage rate of particular products by various target markets and consumers. Attracting brand-loyal customers is most valuable when the consumers are heavy users.

Exhibit 16.4 - Brand Loyalty and Usage Rate

Product Behavior (cont.) Strategies: If the only profitable segment is the brand-loyal heavy user: Focus on switching consumer loyalty to the firm’s brands. If there is a sufficient number of brand-loyal light users: Focus on increasing their usage of the firm’s brand.

Product Behavior (cont.) If there is a sufficient number of variety-seeking heavy users: Attempt to make the firm’s brand name a salient attribute and/or develop a new relative advantage. If there is a sufficient number of variety-seeking light users: Attempt to make the firm’s brand name a salient attribute. Increase usage of the brand among consumers, perhaps by finding a sustainable relative advantage.

The Product Environment Product-related stimuli that consumers attend and comprehend. Types of environmental stimuli: Product attributes Packaging

Product Attributes Products and product attributes are major stimuli that influence consumer affect, cognition, and behavior. Consumers may evaluate these attributes in terms of their own values, beliefs, and past experiences. Marketing and other information also influences whether purchase and use of the product is likely to be rewarding.

Packaging Packaging should: Protect the product as it moves through the channel to the consumer. Be economical and not add undue cost to the product. Allow convenient storage and use of the product by the consumer. Be used effectively to promote the product to the consumer.

Packaging (cont.) Package sizes Influences which brands are chosen. Influences how much of a product is used on particular occasions.

Packaging (cont.) Package colors Thought to have an important impact on consumers’ affect, cognition, and behavior. Has been argued that colors connote meanings to consumers and can be used strategically. Has been reported that consumer perceptions of products may change with a change in package color.

Packaging (cont.) Brand identification and label information Provide additional stimuli for consideration by the consumer. Brand identification simplifies purchase and makes the loyalty development process possible. For some products, label information can strongly influence purchase.

Product Strategy In the short run, new-product strategies are designed to influence consumers to try the product. In the long run, product strategies are designed to develop brand loyalty and obtain large market shares. A critical aspect of designing product strategies involves analyzing consumer-product relationships.

Characteristics of Consumers Consumers vary in their willingness to try new products. Different types of consumers may adopt a new product at different times in the product’s life cycle.

Characteristics of Consumers (cont.) The classic adoption curve has five categories of adopters: Innovators are venturesome and willing to take risks. Early adopters are respectable and often influence the early majority. The early majority avoid risks and are deliberate in their purchases. The late majority are skeptical and cautious about new ideas. Laggards are very traditional and set in their ways.

Exhibit 16.5 - The Adoption Curve

Characteristics of Consumers (cont.) Major focus of consumer research has been to identify the characteristics of innovators and their differences from other consumers. Innovators may influence early adopters, who in turn may influence the early majority to purchase. Innovators tend to be heavy users of other products within a product class. Innovators may have better-developed knowledge structures for particular products.

Characteristics of Products Compatibility refers to the degree to which a product is consistent with consumers’ current affect, cognition, and behavior. Trialability refers to the degree to which a product can be tried on a limited basis or divided into small quantities for an inexpensive trial.

Characteristics of Products (cont.) Observability is the degree to which products or their effects can be sensed by other consumers. Speed refers to how rapidly consumers experience the benefits of the product. Simplicity refers to the degree to which a product is easy for a consumer to understand and use.

Characteristics of Products (cont.) Competitive advantage is the degree to which an item has a sustainable competitive advantage over other product classes, product forms, and brands. Relative advantage is a most important product characteristic for: Obtaining trial Continued purchase Development of brand loyalty

Characteristics of Products (cont.) A relative advantage may be obtained through technological developments. At the brand level it is often difficult to maintain a technological relative advantage.

Characteristics of Products (cont.) Product symbolism refers to what the product or brand means to the consumer and what the consumer experiences in purchasing and using it. The consumption of certain products depend more on their social and psychological meaning than on their functional utility.

Characteristics of Products (cont.) Marketing strategy A favorable image is created through the other elements of the marketing mix. Promotion Price Distribution

Summary Product affect and cognition can be explained in terms of consumer satisfaction and dissatisfaction. Product behavior can be understood in terms of product contact and brand loyalty. Several strategies can be developed based on the relationship between brand loyalty and usage rates.

Summary (cont.) Product attributes and packaging are two types of environmental stimuli. The characteristics of consumers and products are important aspects of product strategy.